E.U. slams the door on talks with Greece before Sunday referendum

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Greece missed its $1.7 billion debt repayment to the International Monetary Fund, becoming the first developed country to default. Here's a look at some of the fallout. (Jorge Ribas/The Washington Post)

ATHENS — European officials on Wednesday slammed the door on any further negotiations with Greece before a national referendum planned for Sunday, daring the Athens government to go ahead with a vote that holds peril for the country no matter which option Greeks choose.

“There will be no talks in the coming days,” Eurogroup President Jeroen Dijsselbloem told reporters Wednesday evening. “We will simply await now the outcome of the referendum on Sunday.”

The hard-line European stance came on a day when Greek authorities had seemed to waver in their determination to proceed with the vote, and it appears to reflect an emerging European view that Athens is in a no-win situation.

Greek Prime Minister Alexis Tsipras announced the referendum last weekend to give Greek voters a chance to weigh in on the spending cuts that Europe has demanded as a condition of financial rescue. But the exact stakes in the vote have been unclear since Greece’s old bailout program expired Tuesday, making the country the first developed nation to miss an International Monetary Fund repayment deadline.

The government has urged a “no” vote, a choice that European officials say would trigger Greece’s exit from the euro zone. A “yes” vote could cause Tsipras’s government to collapse.

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Greeks flood ATMs after banks close as crisis deepens

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Shuttered banks and a closed stock market are causing many to panic and purchase more gas and goods. Greece likely will find out this week whether it will be able to hold on to the euro.

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The Greek Parliament backed down in its confrontation with the country’s creditors.

July 13, 2015 People stand in line to use a bank ATM as a person begs for alms in Athens.Thanassis Stavrakis/AP

After insisting for days that Europe’s offer was intolerable, Tsipras sent a letter late Tuesday night to Greece’s main creditors in which he appeared to open a space for significant concessions in the cash-for-cutbacks standoff, suggesting he could agree to the stringent austerity measures he once repudiated.

His letter proposed some changes to European Union demands but left in place many of the bloc’s most far-reaching terms, including fundamental reforms of the way Greece’s economy is organized.

With Greece now cut off from its financial lifelines, Tsipras’s proposal also reiterated a request for a new $32 billion bailout and more relief from Greece’s crushing debts than E.U. leaders have been prepared to offer.

“Our amendments are concrete and they fully respect the robustness and credibility of the design of the overall program,” Tsipras wrote in the letter, which was addressed to the heads of the E.U. executive arm, the European Central Bank and the IMF.

Revived hope of a deal sent European stock markets higher after two days of downturns. Wall Street also rose.

Yet the prospect of a breakthrough was almost immediately quashed by Greece’s main creditors, including economic powerhouse Germany, even as Washington continued to press for both sides to reach a compromise.

Greeks woke up to shuttered banks and closed ATMs on Monday, as a breakdown in talks between Athens and its creditors pushed the country to the brink. (Reuters)

German Finance Minister Wolfgang Schäuble said the latest Greek letter “did not provide further clarity” in the impasse and was “no basis” for resuming serious negotiations before the referendum. He went on to blast Tsipras’s government for dragging the country deeper into crisis since coming to power in January with a promise to fight further E.U.-imposed financial pressures.

“Greece is in a difficult situation, but purely because of the behavior of the Greek government,” Schäuble said in a speech in the German Parliament’s lower house. “Seeking the blame outside Greece might be helpful in Greece, but it has nothing to do with reality.”

Also in Berlin, German Chancellor Angela Merkel gave no ground. She told German lawmakers that there can be no direct discussions on a new aid program until after the referendum.

“We will wait,” she said, adding that any new bailout would have to be approved by Germany’s Parliament.

French President François Hollande sounded more conciliatory, perhaps to satisfy those in the left wing of his Socialist Party who are sympathetic to Tsipras.

“If we have to wait for a referendum, there is always a risk . . . that we would enter a period of turmoil and enter into the unknown,” he said. “It’s better to be sure than to leap into the void.”

Other European officials, however, signaled that they were in no mood to talk unless Tsipras completely capitulated.

With Europe’s verdict clear, Tsipras appeared on Greek television Wednesday afternoon vowing to stick with plans for the referendum and once again assailing the E.U. demands, which include raising taxes and further trimming pensions.

Greece, he said, will be back at the negotiating table after the referendum, seeking “better terms for the Greek people.”

The fast-moving gambits and declarations across Europe added to the high-stakes atmosphere as Greece tumbled toward the Sunday vote. Tsipras and his allies in the radical leftist Syriza party cast it as a simple up-or-down choice focused on Europe’s bailout proposals. But E.U. leaders have framed it in starker terms: as a judgment on whether Greece wants to remain in the euro currency community or risk being the first country to crash out of it. Polls suggest the vote could go either way.

The situation was further clouded Wednesday by questions about the referendum’s framework from Thorbjorn Jagland, head of the Council of Europe, an advisory body that monitors elections and human rights.

Jagland told the Associated Press that the planned vote did not meet international standards. Its defects included the lack of two weeks’ notice, he said. The Council of Europe has no enforcement powers, but the observations could boost critics of the planned vote, including Greek opposition leaders.

The European Central Bank, which controls a vital stream of emergency cash to Greece’s banks, opted Wednesday to keep the banks in limbo — neither slashing support nor increasing it. The decision means the banks’ fate will be determined only after the referendum.

Greece’s banks have been closed to preserve their dwindling cash reserves, and Greeks have been limited to withdrawing 60 euros, or about $67, per day from ATMs. The cash shortage has caused pain and panic as pensioners go without money for their doctors’ bills and citizens try to stock up on basic grocery supplies.

Greek banks are so low on cash that they could run out by Monday, two Greek officials with knowledge of the situation said.

With the country facing such dire prospects, Pope Francis asked Catholics to pray for the Greek people amid their “keenly felt human and social crisis.”

Anthony Faiola in Berlin and Brian Murphy in Washington contributed to this report.